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A case for sustainable governance, budgeting

Published by The Nation on Fri, 10 Apr 2020

With the hope that current crisis of coronavirus will soon be over and as a way of addressing the impact, labour has suggested that the Federal Government may have to re-organise ways of governance, mostly in the area of budgeting, TOBA AGBOOLA reports.The organised labour has expressed conviction that the post-coronavirus period would call for sustainable, prompt budget releases.IndustriALL Globals Vice President, Issa Aremu, said the crisis has exposed the underbelly of poor governance, characterised by complacency, indifference and unnecessary competition among government agencies.He noted that it was remarkable that the National Assembly had also passed the Emergency Economic Stimulus Bill 2020 to complement the plans of the executive arm, stating that Nigerians must operate collectively and make sure that coronavirus, being an opportunistic disease, would not overwhelm the nation.He stated that fiscal authorities must complement the monetary policies of the Central Bank of Nigeria (CBN) to cope with the challenges of diversification and the impact of COVID-19 on the economy.According to Aremu, this is not the time for uncritical cut in public spending: Already, Nigeria has lowest budget per capita in the world. Additional reduction in the size of the 2020 budget by about N1.5 trillion, as part of the measures to address the impacts of coronavirus disease on the Nigerian economy will only undermine economic recovery and employment creation.CBN has rightly directed that all deposit money banks should increase their support to the pharmaceutical and healthcare industries and support for funding intensive care as well as in training, laboratory testing, equipment and R&D.The bank has increased financial intervention by N100 billion in loan this year to support the health authorities to ensure laboratories, researchers and innovators work with global scientists to patent and or produce vaccines and test kits.Aremu said it was commendable that the CBN Governor, Godwin Emefiele, initiated proactive measures to ameliorate the impact of the disease on the economy that include cutting rates from nine to five per cent per year for one year from March 1; grants extension of moratorium on all CBN intervention facilities effective March 1 and N50billion targeted credit facility through NIRSAL Microfinance Bank for households and and small- and medium-sized enterprises (SMEs) hard hit by Covid-19.He said: It is also significant and commendable that President Muhammadu Buhari had promptly approved a N10 billion grant (about $27 million) to fight the spread of coronavirus, or COVID-19, and already released to Lagos State, which is still counting the highest number of coronavirus cases.On the lockdown, Aremu said it must be complemented with direct and targeted social transfer to the poor in formal and informal sectors whose per day incomes are endangered.He said:With the spirited national efforts, this singular pandemic will come to pass, but the poverty and underdevelopment challenges would persist.Coronavirus crisis is another costly opportunity to reinvent an economy like Chinas with remarkable resilience that has tamed the virus and restoring growth and development. Meanwhile we remain under lock and key against an invisible virus, ask about the plight of your neighbors and send relief materials for those in need.Nigeria Labour Congress (NLC) President, Comrade Ayuba Wabba raised the alarm that the bigmanism attitude of wealthy and influential members of the society may put more Nigerians at risk.Wabba said Nigeria appears not prepared to contain the pandemic, saying: No doubt, we are not prepared for the avoidable tragedy that looms over us. We do not have the requisite infrastructure for diagnosis and treatment on a large scale.As more lockdowns of critical sectors of the economy loom, NLC cautioned that workers must not be cannon fodders for these socio-economic fallouts.Read Also:Wike relaxes restrictions for EasterIn all of these, we demand job and wage protection. To make this possible, factories and businesses will require fiscal stimulus, financial aids and other macro-economic support incentives at this critical time.For millions of workers in the informal sectors including our members in the transport, in the markets and all categories of artisans who are involved in involuntary lockdown, we demand cash grant through their associations to enable them to cope during this difficult time, Wabba said.According to a statement by the Centre for the Study of Economies for Africa (CSEA)CSEA), the country is still grappling with recovery from the 2016 recession, which was a fall out of global oil price crash and insufficient foreign exchange earnings to meet imports.The centre said in the spirit of economic recovery and growth sustainability, the national budget for the fiscal year was prepared with significant revenue expectations but with contestable realisations.The approved budget had projected revenue collections at N8.24 trillion, an increase of about 20 per cent from 2019 figure. The revenue assumptions are premised on increased global oil demand and stable market with oil price benchmark and oil output at $57 per barrel and 2.18 million barrels per day.The emergence of COVID-19 and its increasing incidence in Nigeria has called for drastic review and changes in the earlier revenue expectations and fiscal projections. Compared to events that led to recession in 2016, the state of the global economy poses more difficulties ahead as the oil price is currently below $30 with projections that it will dip further going by the price war among key players in the industry. Unfortunately, the nation has grossly underachieved in setting aside sufficient buffers for rainy days such as it faces in the coming days.In addressing these daunting economic challenges, the current considerations to revise the budget downward is inevitable. However, certain considerations that are expected in the review must not be left out. The assumptions and benchmarks must be based on realisable thresholds and estimates to ensure optimum budget performance, especially on the non-oil revenue components, it stated.Furthermore, the centre stated that cutting expenditures must be done such that the already excluded group and vulnerable are not left to bear the brunt of the economic contraction.It said the economic and growth recovery programme, which has the aim of increasing social inclusion by creating jobs and providing support for the poorest and most vulnerable members of society through investments in social programmes and providing social amenities will no doubt suffers some setbacks. Besides, the downward review of the budget and contractions in public spending could be devastating on poverty and unemployment. The last unemployment report released by the National Bureau of Statistics (NBS) ranks Nigeria 21 among 181 countries with an unemployment rate of about 23.1per cent. The country has also been rated as the poverty capital of the world with an estimated 87 million people living on less than $2 a day threshold.The decision to cut the retail price of gasoline under a price modulation arrangement is a welcome development. The cut is expected to curb rising inflation, especially food price inflation which will mainly benefit the poor.Basically, the government essentially must lead economic diversification drive. It is one practicable way to saddle through the current economic uncertainties and instabilities.What the consequences of COVID-19 pandemic should further offer the Nigerian economic managers and policymakers, is that the one-tracked, monolithic reliance on oil is failing. Diversification priorities to alternative sectors such as agriculture, solid minerals, manufacturing and services sectors, should be further intensified, it stated.
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